Reed Hastings of Netflix on Lying

     

 Credit: James Duncan Davidson/O’Reilly Media, Inc.

Credit: James Duncan Davidson/O’Reilly Media, Inc.

Reed Hastings, the founder and CEO of Netflix, has thought a lot about the importance of maintaining integrity as a company’s core principle.

Here is what he has to say:

“An angle I’ve always found interesting is that lying works, so why do so many businesses talk so much internally about integrity?  Why don’t they teach the skills of lying?  Well, if you lie to outsiders, which arguably can be effective in the short term, you create a culture where people lie internally and you are unable to run an effective large organization because all the different departments learn to lie to each other and to management, and upon that false foundation the lack of good information will kill the business.  I’ve always been surprised by how much businesses talk about integrity.  And I think this is why.  It’s because unless you make it a core value, the business internally becomes impossible to operate.  And if executives see me lying to other executives or to outsiders, they wonder, of course, if I’m lying to them.  Conversely, when they see us take a short term hit on some goal because we are  honest it fills them with confidence that I’m honest towards them.

“So, businesses that don’t preach integrity fall hard internally and thus the businesses that we have today – the survivors – are the ones that are effective at preaching and embodying integrity.  When there are aberrations like Madoff, they disappear from the gene pool of companies.”

Takeaways

Different executives and organizations are motivated to preach and practice high standards for different reasons.  For some, it might be a personal, even religious code that they bring to everything they do.  For others, they are simply carrying down traditions created by founders or executives before them.  Reed Hastings takes a more analytical approach to the issue of honesty in the workplace.  Helpfully, he acknowledges that in the short term, dishonesty can provide an advantage, i.e. “lying works.” But over time, he posits, lack of trust in an organization makes the entity, in his words, “impossible to operate.” 

As companies are composed of people with diverse backgrounds and belief systems, there’s something refreshing and effective about the way Reed Hastings lays out his views.  “Tell the truth,” he says, “or this company can’t be successful.”